Canadian Stock Home Bias in Your Portfolio

A recent article about US dividends from Canadian stocks took us down a 'US' rabbit hole recently. One of the most common problems we see in Canadian investment portfolios is a large bias toward Canadian domiciled and traded stocks. Often times a portfolio can be weighted in excess of 60% to Canada when it makes up less than 5% of the world economy. Many investors might not even realize this could be a problem for a portfolio but the risks here are easy to highlight at a high level:

  1. The TSX has underperformed the S&P 500 over 1, 2, 5- and 10-year periods (in some periods, vastly underperformed)
  2. The TSX is largely a ‘bet’ on the financials and energy sectors which is actually a concentration risk

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